Swiss watch exports bounce back in July ahead of US tariffs

[ZURICH] Swiss watch exports returned to growth in July after a steep drop the previous month, as companies tried to build up their stock in the US ahead of higher trade tariffs.

Exports increased by 6.9 per cent compared to a year earlier, the Federation of the Swiss Watch Industry said in a statement on Thursday (Aug 21). Excluding the US impact, exports would have dropped 0.9 per cent, illustrating an industry still in the doldrums. Shipments to Japan fell significantly, and China went back into retreat.

The period coincided with intense lobbying by Swiss officials as US President Donald Trump prepared to impose tariffs, part of his strategy to bring manufacturing back to the US. The 39 per cent levy he settled on – higher than the European Union and other developed economies – threatens to weigh on sales of watch makers like Swatch Group and Compagnie Financière Richemont.

The Swiss government is trying to reduce the tariff and has made a new offer to the US. Switzerland’s GDP growth could be reduced by up to 0.4 percentage points over four quarters if the US tariff remains at 39 per cent, economists at UBS including Maxime Botteron forecast.

“Swiss watch-export data remain heavily skewed by the US, where brands continued to front-load shipments ahead of the Aug one tariff decision,” Vontobel analyst Jean-Philippe Bertschy said in a note. “The rise of ‘luxury fatigue,’ a declining sense of satisfaction from luxury purchases, and worsening consumer sentiment continue to contribute to a less optimistic outlook.”

The most expensive watches were the best performing segment, according to the federation, with exports of products priced above 3,000 Swiss francs (S$4,794) growing 9.4 per cent. Watches with an export price between 200 and 500 francs were up 7.3 per cent, while those priced below 200 francs fell. BLOOMBERG